Which of the Following Statements Is FALSE

question 74

Multiple Choice

Which of the following statements is FALSE?

• A)If we increase the fraction invested in the efficient portfolio beyond 100%,we are short selling the risk-free investment.
• B)As we increase the fraction invested in the efficient portfolio,we increase our risk premium but not our risk proportionately.
• C)To earn the highest possible expected return for any level of volatility we must find the portfolio that generates the steepest possible line when combined with the risk-free investment.
• D)Every investor should invest in the tangent portfolio independent of his or her taste for risk.

---

Definitions:

Economic Growth

The growing ability of the economy to produce goods and services.

Industry-specific

Pertains to aspects or characteristics unique to a particular industry or sector.

Lemons

A colloquial term in economic theory often referring to products of inferior quality sold because of asymmetric information between buyers and sellers.

Plums

A type of fruit belonging to the genus Prunus, known for its juicy and sweet flesh.